Credit Constraints and Growth in a Global Economy
AbstractIn a period of rapid integration and accelerated growth in emerging markets, three striking trends have been (1) a divergence in the private saving rates of emerging markets and advanced economies, (2) large net capital outflows from emerging markets, and (3) a sustained decline in the world interest rate. This paper shows that in a multi-period OLG model, the interaction between growth and household credit constraints --- more severe in emerging markets --- is able to account for all of the above facts. We provide micro-level evidence that corroborates our mechanism: saving behaviors across age groups in the U.S. and China are broadly supportive of the predictions of the model.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9109.
Date of creation: Aug 2012
Date of revision:
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Other versions of this item:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-03 (All new papers)
- NEP-DGE-2012-09-03 (Dynamic General Equilibrium)
- NEP-OPM-2012-09-03 (Open Economy Macroeconomic)
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- Bacchetta Philippe & Benhima Kenza, 2010.
"The Demand for Liquid Assets, Corporate Saving, and Global Imbalances,"
Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP)
10.12, Université de Lausanne, Faculté des HEC, DEEP.
- Bacchetta, Philippe & Benhima, Kenza, 2012. "The Demand for Liquid Assets, Corporate Saving, and Global Imbalances," CEPR Discussion Papers 9268, C.E.P.R. Discussion Papers.
- Bussière, Matthieu & Kalantzis, Yannick & Lafarguette, Romain & Sicular, Terry, 2013. "Understanding household savings in China: the role of the housing market and borrowing constraints," MPRA Paper 44611, University Library of Munich, Germany.
- Yi Wen, 2011. "Making sense of China’s astronomical foreign reserves," Working Papers 2011-018, Federal Reserve Bank of St. Louis.
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